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Court of Appeals Upholds CGL Exclusion for Injuries to Employees of Subcontractors Working for the Insured

Insurance Coverage / January 22, 2020

In the context of commercial general liability (“CGL”) coverage, exclusionary clauses “are strictly construed in favor of the insured….” Auto Owners Ins Co v Seils, 310 Mich App 132, 146-147 (2015). However, “clear and specific exclusions will be enforced as written so that the insurance company is not held liable for a risk it did not assume.” Id.

While ambiguities will be read in favor of coverage, a CGL policy is ambiguous only “when, after considering the entire contract, its words may reasonably be understood in different ways.” Id. at 146. When “a fair reading of the entire contract of insurance leads one to understand that there is coverage under particular circumstances and another fair reading of it leads one to understand there is no coverage under the same circumstances the contract is ambiguous….” Id.

The Court of Appeals recently applied these principles in Messenger v Atain Ins Co, finding that an exclusion in the general contractor’s CGL policy was free of ambiguity, and foreclosed coverage for the wrongful death claim of a subcontractor’s employee.

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